ICF International at Sidoti’s Small-Cap Virtual Conference: Strategic Insights

On Thursday, 12 June 2025, ICF International (NASDAQ:ICFI) presented a strategic overview at Sidoti’s Small-Cap Virtual Conference. The company highlighted its diverse client portfolio and adaptability to market changes, despite facing revenue losses from contract terminations. ICF remains optimistic about growth in sectors like IT modernization and health services.

Key Takeaways

• ICF lost $115 million in potential 2025 revenues due to contract terminations, primarily in international health work.
• The company is focusing on IT modernization, particularly Agile development and open-source applications.
• Nonfederal government business is projected to grow by approximately 15%.
• ICF aims to maintain adjusted EBITDA margins by aligning its cost structure with revenue production.
• Potential growth is anticipated in 2026, with a focus on health and human services.

Financial Results

• Revenue and Growth:

- ICF has achieved a 6.4% revenue CAGR over the past five years.

- The non-GAAP five-year EPS CAGR increased by 12.4%.

- Nonfederal government business is expected to rise by about 15%.

- Despite losing $115 million in potential revenues, the company is seeing a recovery in contract modifications and recompete procurements.

• Margins and Cost Management:

- The company is focused on maintaining similar adjusted EBITDA margins to the previous year.

- First-quarter gross profit margins and adjusted EBITDA margins have improved year-over-year.

- Cost-reimbursable contracts decreased from 13% to 8% in Q1 year-over-year.

Operational Updates

• Nonfederal Government Business:

- Growth is driven by energy efficiency programs, electrification, and expansion into commercial and industrial sectors.

• Renewable Energy and Climate-Related Services:

- Uncertainty in IRA and tax incentives affects the pace of renewable energy projects.

- ICF supports developers and investors through advisory work in renewable energy.

• Disaster Recovery Activity:

- Disaster management is a growth area, with expected increases in RFPs due to past storms.

- A shift of disaster fund allocation from federal to state levels is anticipated.

• Federal Government Spending:

- Approximately half of the trailing 12-month revenue comes from the U.S. Federal Government.

- ICF projects a mid- to high-single-digit decline in IT modernization revenues for 2025.

Future Outlook

• IT Modernization:

- ICF expects IT modernization to return to growth in 2026.

- The company emphasizes the importance of modernizing data from legacy systems.

- ICF is optimistic about its role in the evolving technology ecosystem.

Conclusion

Readers are encouraged to refer to the full transcript for a detailed account of ICF International’s presentation at the Sidoti’s Small-Cap Virtual Conference.

Full transcript - Sidoti’s Small-Cap Virtual Conference:

Mark Redick, Senior Analyst, Sidoti and Company: Okay. Good morning, everyone. It’s now 09:15, here on the East Coast, and we’re ready to begin our next session. My name is Mark Redick. I’m senior analyst with Sidoti and Company, and I thank you for joining the Sidoti Juice SmallCap virtual conference.

Now our next company is ICF International, ticker is ICFI. And joining us today is Anne Cho, executive vice president who leads the energy, environment, and infrastructure group, and Barry Brodus, chief financial officer. Now our time together will be in a fireside chat format. But before we begin, just a reminder, feel free to click on the q and a button at the bottom of your screen if you’d like to submit a question. There’s no need to wait until the end.

You’re able to do so at any point during our time together today. And now with that, we can we can get started. So of all, good morning, and thank you for joining us.

Barry Brodus, Chief Financial Officer, ICF International: Thanks, Mark. Good morning. Appreciate you having us today.

Mark Redick, Senior Analyst, Sidoti and Company: So why don’t we start for for those that are new to the story? Maybe if we can start with with a brief profile of ICF International.

Anne Cho, Executive Vice President, ICF International: Sure. I’ll take that. I’ll I’ll I’ll try to do that. So so ICF is a global solutions and technology provider. We’ve been in business since 1969.

We went public in 02/2006, and we have been providing primarily consulting and advisory services and then solutions and over time expanded into program implementation and large scale program management with focus in the in the energy space. Our implementation business started in the energy space and then has over time expanded into other areas as well, including technology, digital engagement, and more recently, IT modernization, which we can talk about more later. Over the past five years, although this is more Barry will get into this more, but our revenue CAGR has been up 6.4%, and we’ve had a 12.4% increase in non GAAP five year EPS CAGR. So that growth has been influenced by a very diverse portfolio and a growing and a strong portfolio of clients across a range of sectors, which, again, we can get into, and then a very strong culture at ICF. And I speak to that having been here thirty years.

Mark Redick, Senior Analyst, Sidoti and Company: Excellent. So can we talk a little bit about, or maybe provide an update as to what you’re seeing with your nonfederal government, business as well as your expectations for performance this year?

Anne Cho, Executive Vice President, ICF International: Sure. So as I said, we serve a diversified client portfolio. About half of our revenues are working with commercial clients, mainly energy utilities, state and local clients, and international government clients. That business has been growing really well. That’s largely what I’m responsible for.

And in aggregate, we expect that those businesses are gonna be up about 15%.

Mark Redick, Senior Analyst, Sidoti and Company: Excellent. And the key

Anne Cho, Executive Vice President, ICF International: question In terms

of some of the

Mark Redick, Senior Analyst, Sidoti and Company: I’m sorry, go ahead.

Anne Cho, Executive Vice President, ICF International: No, I was just going to say some of the things that are sort of driving that trajectory are at the core of our utility business are is energy efficiency programs. But the nature of those energy efficiency programs, if any of you have been following us for a long time, the nature of those programs has been evolving over time. The needs have been evolving, the needs on the part of the utilities. We’ve long been a leader on the residential energy efficiency side, but increasingly, we’ve had expansion of those kinds of programs into more, quote unquote, we’ve been calling nontraditional programs like electrification, flexible load management, marketing, and customer insights, and then more into the commercial industrial space. So that, you know, that has been helping to expand that portfolio of work.

Mark Redick, Senior Analyst, Sidoti and Company: K. Excellent. Maybe we could spend some time if you could, discuss what you’re seeing from clients, regarding renewable energy and and and climate related, services, particularly, as we’re looking at the potential of shifting from federal to state and local level needs?

Anne Cho, Executive Vice President, ICF International: Yeah. So the it’s obviously a very exciting time in the energy space. Energy, you know, I think is getting a lot a lot of attention right now. I think it’s, to some extent in the renewable arena, but in in in general, the focus on what will energy demand growth look like over the next, you know, ten to twenty to thirty years. It’s a hot topic.

I think that there’s a lot there are a lot of projections out there. And no matter who you ask, I think there’s certainty that you’re gonna see faster growth in in energy demand in The United States than we’ve been seeing over the last, you know, several decades. Considerably higher and both its demand sort of in general, but also demand during peak hours. And so that obviously that has driven a lot of conversation. The need for renewable energy and the response in the industry, I think is has been somewhat impacted by uncertainty related to IRA and and tax incentives.

That said, the need for this for energy right now is so it’s it’s pressing, and it’s a near term need, which a lot of the renewables that were already in the queue that are already sort of and I mean the literal and the figurative queue. Those renewable energy resources are closer to implementation, and so many of those are moving forward. I think where we’re continuing to see interest is in renewable energy projects that have you know, that where they’re cost effective with or without the incentives. I think that, you in some cases, some that are on the bubble, I think that’s where you’re seeing the stall where people are really waiting to see how long, how deeply will the tax incentives change. But we’re following that very closely.

Our business, actually, we do a lot of advisory work supporting developers and supporting investors who are thinking about those kinds of projects. And so I think the nature of the projects has expanded to include some more fossil oriented projects. But the and the pace, I think, has just been impacted by the uncertainty. But we still as I said, we still see a lot of them moving forward partly because they’re they’re more realistic near term opportunity for energy expansion.

Mark Redick, Senior Analyst, Sidoti and Company: Great. And then one of the areas certainly in the headlines as far as day to day uncertainty is around the current budget proposals. Maybe you could talk a little bit if you have any areas of concern related to maybe potential curtailments related to the IRA or anything within the current proposal?

Anne Cho, Executive Vice President, ICF International: Well, think that for us, the energy advisory portion of our business is relatively small compared to the work that we do for energy utilities designing and implementing these energy efficiency and energy management programs. But the trajectory while it’s for instance, I think we all saw M and A activity die down in the first quarter of this year, but we’ve seen it pick back up. I think it’s those kinds of trends that the energy advisory business has to follow. That said, the demand for electricity and the, you know, this the pressure between the data center large load demand, the crypto demand, and this this move to electrification and in some, you know, in some parts of the country, a real focus on decarbonization. All of those things are driving electricity demand and and therefore driving the need for the kinds of services that we do.

So whether it’s planning or strategic planning, integrated resource planning, optimization of a suite of both, you know, hard assets but also behavioral solutions to manage demand, especially during peaks. Sort of plays to our sweet spot. So that that’s where we’re very focused. And I think that, you know, in terms of how the tax credits play out, I think that’s gonna that will help us to sort out, you know, which which developers, which projects are gonna move faster. So for instance, offshore wind, that has been an area where we’ve seen slope, you know, to almost to a stall as compared to some of the other areas where, you know, we see continued movement, especially, you know, where where those projects are profitable either way.

Mark Redick, Senior Analyst, Sidoti and Company: Excellent. Excellent. And, again, as a reminder, folks, if you would like to submit a question, just click on the q and a button at the bottom of your screen, and we’ll be addressing some questions from the audience toward the end of our time together. Certainly, last couple of days, FEMA has been in the headlines. Maybe you can talk a little bit about your your thoughts and views and maybe an update on disaster recovery activity and and what you’re seeing on on the state and local level.

Anne Cho, Executive Vice President, ICF International: So, yes, if I had a crystal ball and I knew, I would tell you. But but for sir for sure, the work that we do in disaster management is is definitely the funding for that work is coming from the federal government. So a lot of that funding comes through HUD, the housing development, and a lot of that funding could come through FEMA. But then the the allocations are given to the states or the territories of the local governments who then implement the programs. And so where we work in disaster management, we continue to see it as a growth area.

We expect to see more RFPs this year coming out as a result of some of the it’s there’s a lag. So, you know, you’d see a storm happen in somewhere like Georgia or North Carolina. Well, those bids don’t those RFPs don’t actually hit the streets till almost a year later for the for the real large work and the implementation of those recovery programs. And so this is the time when you’re starting to see those hit the street. And then if you have another large season, obviously, there’s another one year lag.

We expect that even though they’re they’re planning to make a significant change to how disaster funds are allocated, it’s pretty clear that the federal government is interested in moving a lot of that responsibility from the federal government to the states, which, you know, that that trend appears to be clear. Timing, I think specifics are not clear. But for us, that’s that’s not necessarily a bad thing. We we one of our differentiators has been that we have run some of the largest disaster recovery programs in the nation’s history. So, you know, Katrina in Louisiana, Maria in Puerto Rico, Sandy in New Jersey.

And so that sets us up pretty well from a reputational standpoint. And I think, you know, our that reputation and that ability to to manage those funds in a compliant way, I think that has always been a strength of ICF. So so we’ll continue to do that. I think that this the close relationships and reputational trust that we’ve built in some of these areas that are most likely to be hit by disasters. I think that that serves us well as, you know, as these states and local governments issue RFPs.

So anyway and I think that, you know, if if we see this move from federal to states, I think our role becomes that much more critical because we are we have the infrastructure in place to be able to run these programs at scale, you with a high level of fidelity. And so we’re proud of that.

Barry Brodus, Chief Financial Officer, ICF International: Yeah. I think that’s an important point that if the federal government goes through some of the things that have been talked about where they really decentralized the the FEMA role and push the responsibility more out into the states where the federal government would still fund the disaster recovery. I mean, that really would, you know we would respond very well with that because we can go out to the states, help the states, you know, manage their way through these disasters. So there’s I think that would create, you know, a good amount of opportunity for the company. So either way, we’re in a a really good position based on the things that Anna talked about.

Mark Redick, Senior Analyst, Sidoti and Company: Excellent. Excellent. So approximately half of the the trailing 12 web revenue is is to US federal government. Maybe you could talk a little bit about as far as the type of impact that you’ve seen so far with spending curtailments, what type of impact you you you have there, and how much timing’s always, you know, uncertainty. But maybe you could talk a little bit about the the revenue losses that you’re seeing and and how much of that is sort of already in the rearview mirror and what may be ahead of you?

Anne Cho, Executive Vice President, ICF International: Sure. So and you can, you know, feel free to correct me. So so through May 1, we lost about a 115,000,000 in revenues for so 2025 revenues as a result of contract terminations or, you know, stop work orders that that led to terminations. And that’s about about 50% a little over 50% of that was represented by our work for USAID doing international health type work. So, you know, it’s too soon to say that the risk is completely behind us.

Again, the crystal ball would be useful. But we have seen a slowdown in that kind of activity. So and that’s you know, that obviously is something that we were re you know, we were looking for. We wanted to see sort of when would it start to level out. And so at the same time, we have seen a pickup in some funding modifications.

So, so I’m sure for people on the phone, it’s hard to imagine this. But you’re basically you’re trying to feel the vibrations. Right? You’re trying to understand, okay. This wave has come through.

Now what how should we expect that the government is gonna move forward? And each of these agencies, obviously you know, in some agencies, they have not even put you the agency heads have not been put in play. The the sort of the for instance, in Department of Transportation, and in some of the others, have individual modal agencies that still haven’t you know, they haven’t approved their administrators. And so you can imagine that each agency sort of on its own temporal path, and we’re trying to track each of them individually. So with that said, we are seeing contract modifications, and we’re seeing some recompete procurements sort of come back to the fore that had been stalled or sort of, you know, where where we hadn’t heard much, and all of a sudden, they’ve come back in.

We can sort of see them back on a procurement forecast. We have are not yet seeing a lot of net new opportunities. And I think that, again, goes back to these agencies still trying to sort of reshape what is it that the administrator and, you know, the new leadership is really looking for and how does that does that match up with their their procurement plans. But we are, you know, we are waiting and watching for that. We have had direct meetings with clients and or with Doge employees, particularly in the technology area and and then specifically on some projects where, you know, we’ve had to had to demonstrate our ability to do the work, whether it’s some sort of technology project, and we’ve passed the requisite reviews for that, which has been great.

And those meetings with the politicals, the doge, and the program staff, you know, it’s critical. Those all three are important right now. They’ve included discussions of agency mission, administration priorities, and ways that we can turn our skill sets into sort of the the kinds of services that they need. We have seen some task orders that were discontinued or terminated actually get turned back on. So, again, you know, you’re just trying to read the, you know, read the signs.

And sometimes they come back on under the same agency in the same vehicle, and sometimes they might come back on under a different agency or a different vehicle. So, you know, so I think that that’s that’s the kind of tracking that we’re doing. We are seeing procurements. You know, we we have seen some continuation of new procurements. I said there are not not a lot of new opportunities, but we have seen new procurements disappear and then show back up on the on the list for future procurements.

So that’s that’s also a sign that we’re we’re following.

Barry Brodus, Chief Financial Officer, ICF International: I I would say just as an add on to that, so if you really step back and think about the impact of various executive orders or actions by Doge since January 20, It’s really focused in two areas. You know, one is our USAID work, Jen mentioned, as well as, you know, key program here and there. One would be, for example, Energy Star. You know, so, you know, we’ve had bits and pieces of different programs that, you know, have been affected. But I would say that outside of those two main customer sets, it’s just been, like I said, relatively small.

We have seen, you know, the activity, which was a bit of a flurry, you know, right around after the inauguration in the couple of ways where where Doge was really involved with, you know, not just us, but, you know, a great many number of companies in our industry. Things have settled down quite a bit. We’re starting to see some activities as, you know, the agency heads have, you know, settled into their roles. You know, and I I guess, for lack of a better term, you really understood understand, you know, what the agency’s, you know, goals, missions are for the American people. And we’re seeing things, you know, start to to flow back on.

It’s slow. The pace is not what we would see in a typical year, but, you know, we’re, you know, we’re excited that that there are gonna be opportunities that that come about that are right in our wheelhouse. And I I think that the company, as it has in its history, been able to react to the changing environment. And we’re well positioned to take advantage of these new opportunities that come about.

Anne Cho, Executive Vice President, ICF International: And it’s nonlinear. I mean, I think I think so it requires a certain level of scrappy, you know, behavior, which I think is sort of that’s that has been a strength of ICF. They have this diversified portfolio and we, you know, we we roll with that, you know, better than some. So that’s Yeah. That actually plays to our strengths.

Mark Redick, Senior Analyst, Sidoti and Company: Excellent. One of the areas that has historically, been viewed as as as bipartisan is sort of the need for for IT modernization, and and maybe we can talk a little bit about how you’re currently viewing those growth prospects for that as well as digital transformation on the federal level specifically.

Anne Cho, Executive Vice President, ICF International: Sure. So, yeah, about half of our work in the federal space is what we would call sort of IT modernization, digital, you know, sort of digital transformation. And that is a relatively new business for us. I had mentioned that, you know, we had this evolution as a firm to include more of the technology IT modernization and technology type implementation work. We are because we’re relatively new entrant, we did we couldn’t we could not rebuild sort of the the parts of the technology stack that were sort of more commoditized.

They were pretty well well covered by other firms. And so when we got into this area at scale, our focus is not on managing legacy systems or sort of doing the PMO, you know, o and m type work. In fact, our focus has been more on the modernization and the sort of how you take data from these legacy systems and rationalize it so that you can use it in newer, more modern systems. And so that’s great because, you know, in this moment because that’s way more in line with what the the administration sees as high priority and valuable work. Also, where the new administration is not a big fan of cost plus contracts, we really did not have that many cost plus contracts in our technology business.

About 80 of our contracts were firm fixed price. And so that kind of keeps in line with the administration’s priorities, just have a little more pay for performance sort of ethic. And I think that we were already sort of there in our technologies work. The 2025 guidance that we’ve put out projects a mid to high single digits decline in our IT modernization revenues. And that is mainly because of these slowdowns, these pauses.

It’s not so much that somebody’s getting turned off or that our programs are being deemed irrelevant, but rather that the procurement cycles have just they ground to a halt as everything gets looked at and evaluated. And so and there’s been this postponement of new contracts as those reviews. So, you know, given our recent experience and our positioning, I think we’re hoping that we’ll see that return back to growth in 2026. And then, you know, I think IT mod, we still see IT mod as an area of, you know, a priority for ICF. And, you know, we we think that we have a pretty solid position in the in the larger technology ecosystem, you know, which, you know, includes in this administration a lot of Silicon Valley entrance as well because we bring the right size and the right amount of agility and sort of and and some aspect of domain that doesn’t exist in a lot of those competitors.

So we feel like we can see our space in this new environment.

Barry Brodus, Chief Financial Officer, ICF International: I think one thing to add is that, and Ann mentioned this, is that we’ve had a number of visits from the Doge folks. They’ve visited our program offices where our customers sit and where we sit. And one of the things that I think has really come to light, which is very favorable for our company, is that, you know, the basis of how we do application development is an agile, you know, fast, you know, application development mode. We use low code, no code, open source type of, you know, applications. We were, you know, partners with Salesforce, ServiceNow, Appian, you know, other, you know, software providers such as those.

You know? And we’re already you know, like Dan said, most of our contracts, you know, are fixed price. They’re outcome based, which is what the administration wants to see. Mhmm. So we’re we’re already, you know, well positioned, well versed in this environment.

And, you know, we’ve shown really well, you know, when we we have to present, you know, our code, how we go about, you know, developing applications. They’re they’re quick hits, you know, from a cost perspective, you know, very much affordable, if you will, for our customers, just the way we go about producing applications for our customer sets. So we feel very strongly that once things kind of settle down and get into a normal rhythm that we’re well positioned to really exploit how we actually have done things from a historical perspective and that we’ve got the technology experts that, you know, the new administration is is looking for. So we feel good about that.

Anne Cho, Executive Vice President, ICF International: Yeah. And along the lines of what Barry was saying, you know, the rapid prototyping, that’s the that’s that’s the kind of thing that this administration is looking for. And I think that was already some sort of inherent in how we go to market. And so I think that’s been a that’s been actually the the new administration, the new folks in these agencies are very interested in seeing kind of what’s the art of the possible, and I think that’s where we can offer something that’s a little bit new.

Barry Brodus, Chief Financial Officer, ICF International: And, you know, from a a, you know, cutting edge technology perspective, I mean, we’re already out there from an AI perspective, you know, using AI tools to, you know, help our customers be more effective and efficient with what, you know, services they provide, you know, to to their folks that that use their services. So now that’s ongoing. We’ve got a real, you know, structured, disciplined approach to using AI tools that we’ve we thought, you know, quite a bit about, and it’s it’s really served us well, you know, with bringing, you know, these kind of technologies to our customers and showing them, you know, how they can how we can use AI along with traditional application development to really enhance, you know, what we can deliver.

Mark Redick, Senior Analyst, Sidoti and Company: Excellent. One of the key areas that investors have certainly focused on and and and an area of strength for for for a long time has been your work with health and human services. And maybe we can take a a a little time to to talk a little bit about those activities, what you’re seeing there, and and the type of areas of of demand that are being put to the forefront by the new administration.

Anne Cho, Executive Vice President, ICF International: Yeah. Sure. So so on the surface, this make America healthy again. It’s uh-huh. So this is that campaign holds a lot of promise for ICF, you know, at at the surface level.

We you know, our track record of work and expertise in this area, you know, goes back to almost to the founding of the firm. And and when you look at what they say they’d like to achieve through that campaign, it is very well aligned. So, you know, I think what we’re trying to do is figure out how the actual campaign is sort of the the stated mission kind of how that funnels into the organization of of the the agency. So right now, there’s, you know, there’s been a lot of disruption, that’s resulted from this this HHS reorganization, and the staff reps that have that were happening there have seemed to ease. So you can start to see, okay.

Well, who’s gonna be here in you know, who’s gonna stay in in the agency and in these program offices, because for a little while, we just couldn’t get much information because there’s just so much chaos. So now we’re starting to get insights into the ’26 budget and the justification documents that were recently re released. I think gave us a little many more clues into how they’re gonna sort of take the campaign promises and turn them into, you agency activities. So CMS was largely untouched by the reorganization and the rifts. And so, you know, we we have seen initial and, again, this is this is at this moment, I’m telling you what I know and as all we might all read something this afternoon.

But but there are initial indications that the budget for CMS is gonna stay largely intact. And so that’s that’s good news. CMS has be you know, became a major client for ICF when we did our Symantec Bits acquisition, which was part of our IT modernization, digital engagement engagement sort of investment strategy. And so when we pull pull in Symantec bits, that gave us more of a footprint in CMS, and we continue to have a strong presence there. So that’s been great, and we expect that that will continue.

Areas of focus there for growth would include prevention of healthcare fraud, waste and abuse, which is clearly in line with the administration priorities, as well as developing and testing models and approaches to deliver better healthcare for lower costs. And then and then I mentioned the agency for for a healthy America, that’s an area of interest for us. There’s a lawsuit currently. So one of the reasons that we can’t totally predict where that’s headed, this lawsuit’s present prevented the government from moving ahead on officially creating that new that new agency, but meetings and planning efforts are we know they’re underway. Is gonna include several of the agencies we’ve historically worked for.

So SAMHSA, HRSA, NIEHS, and parts of CDC among others. And those divisions historically have focused on mental health, chronic health, environmental health, behavioral health, all areas where we have strong expertise and where we have long standing, not just subject matter expertise, but also kind of hard to acquire and sort of niche expertise. So, you know, bioinformatics and, you know, environmental toxicology and things like that where it would be efficient to access that expertise here as part of that, you know, supporting that that mission. The portion of CDC that’s not moving to is gonna focus on disease surveillance and response, which was formerly under an agency called ASPR, which is Assistant Secretary for Preparedness and Response. Those are areas that we’ve supported for decades and we would expect to continue supporting.

So obviously, disease surveillance is still a very important piece of the administration’s priorities and we’ve been very active in that area. So we’ll continue we would expect to continue to be active there.

Mark Redick, Senior Analyst, Sidoti and Company: Excellent. Amazingly, but I guess maybe not surprisingly because we’ve time has flown by. We’re we’re technically at the end of our time, but I did wanna sneak in one

Anne Cho, Executive Vice President, ICF International: of the last one.

Mark Redick, Senior Analyst, Sidoti and Company: It’s it’s it’s it’s been very, very productive, and I really thank you for that. Just one last one maybe we could sneak in. Maybe talk a little bit about the the the guidance around adjusted EBITDA margins. The the the commentary is we’re expecting it to be similar to the year before despite all the areas of uncertainty. Maybe you can talk a little bit about the actions that you’ve taken that would support being able to see stay stable on a margin basis.

Barry Brodus, Chief Financial Officer, ICF International: Sure. So, you know, as we were looking, at 2025 and trying to anticipate, you know, some of the things that we’ve seen, you know, happen with some of our contracts, you know, we we put in place plans to make sure that our cost structure is aligned with our revenue production. And that would enable us to maintain our margins. As we saw in the first quarter, our actual gross profit margins, our adjusted EBITDA margins actually improved year over year. So we’re glad to see that.

Now from a specific actions perspective, I’ll break it down into two different sections. One is, you know, folks at work direct directly for in support of our contracts. And so for those people, if if we have a contract that is is ended, then we’ll try to redeploy those staffs to other, you know, contracts and and become billable resources in support of other organizations, other contracts. If we can’t find, you know, work for those folks, then, you know, unfortunately, they have to depart the the company. We act very quickly on that.

You know, we certainly wanna retain as many, you know, employees because of the the valuable, you know, experiences and insights that they have and domain expertise in their their given fields. So that’s one side of the equation. On the other side is the indirect, you know, cost that the company has to support the business. And if the the revenues decrease from a year over year perspective, then, you know, it’s our thought that, you know, our

Mark Redick, Senior Analyst, Sidoti and Company: our

Barry Brodus, Chief Financial Officer, ICF International: support organizations need to follow suit. And so we’ve taken, you know, very quick action to reduce the cost structure of the company. And the actions that we’ve taken were really reflected in the first quarter results where, like I had mentioned, that we not only the margins were steady with 2024, but they’re actually a little bit better. Know? And and one other point is that as the business shifts and we become, you know, an organization that has more commercial work, inherently, that commercial work is more profitable for a number of reasons.

One is the mix and another is the contract types. You know? And if you look at, for example, the the cost reimbursable contracts, you know, last year in the first quarter, we were almost 13% cost reimbursable from a contract structure perspective. During the first quarter around 8%. And the majority of that work went to fixed price type of contracts, which, generally speaking, are associated more with commercial work.

And so those factors you know, certainly helped as well. So it’s it’s really twofold. It’s it’s the type of contracts, the mix of business, as well as managing the cost structure of the company.

Mark Redick, Senior Analyst, Sidoti and Company: Excellent. Well, this has been outstanding. I really wanna thank you both for for joining us and and providing all of your insights. It’s really been a great use of time. I wanna thank all of our participants for joining us today, and, everybody have a wonderful and productive remainder of the day.

Thank you so much.

Barry Brodus, Chief Financial Officer, ICF International: Thanks, Mark. Thank you. Thanks, everybody.

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